Blog: Workers Compensation

These two programs both replace wages during an absence, and payroll treats them almost entirely differently. The distinguishing question is simple — was the condition work-related? — and nearly everything else follows from it, including the taxability, the reporting, and the employee's rights.

The errors happen at the boundary: a condition whose work-relatedness is disputed, an employee receiving both, or an employer that applies the workers' compensation tax ...

A structured return-to-work program is the highest-return workers' compensation intervention available to most employers, and the reason is arithmetic rather than philosophy: claim duration drives indemnity cost, indemnity cost drives the experience modifier, and the modifier drives premium for years.

Shortening a claim by returning an employee to modified duty reduces the wage replacement paid, reduces the reserve the carrier sets, and reduces the loss that enters ...

Workers' compensation fraud is a real cost, and the way employers respond to suspicion causes more damage than the fraud in a meaningful number of cases. Retaliation claims arising from a mishandled fraud suspicion routinely exceed the value of the claim in dispute.

So this guide covers the indicators and — with equal weight — what to do with them. The single most important principle: a red flag is a reason to investigate, never a reason to act.

Nine Red

Workers' compensation is usually owned by HR, risk management, or an outside broker — and it is priced off payroll data. Premium is calculated from the wages you report, allocated to the classification codes you assign, adjusted by an experience modifier derived from claims history. Every one of those inputs originates in or passes through payroll.

That makes this a payroll topic whether or not payroll administers the program, and it means a payroll data error ...